SYDNEY: Australian shares closed largely flat on Friday, as losses in financials and consumer stocks countered gains in commodity stocks, while hotter-than-expected US inflation data raised some doubts about early rate cuts from the Federal Reserve.

The S&P/ASX 200 index closed 0.1% lower at 7,498.30. The benchmark logged a marginal 0.1% gain for the week.

Data released overnight showed US consumer prices rose more than expected in December, with a closely watched core measure coming in slightly above consensus.

Markets were still pricing in a more than 73% chance for the Fed’s first rate cut to come in March.

“Our assessment is that both the inflation and labour market data published this year are not supportive of an early rate cut and we therefore suspect there is a significant risk of a market correction,” analysts at ANZ wrote in a note.

Earlier this week, data showed Australia’s inflation slumped to a near two-year low in November and core inflation also eased sharply.

“Looking further forward, the most recent US CPI release serves as a reminder that the return of inflation to more normal levels over 2024 is unlikely to be perfectly smooth,” ANZ analysts wrote.

They expect the Reserve Bank of Australia to stay on hold in February.

On the local bourse, energy stocks gained 0.5%, as oil prices rose more than 2% after the US and Britain carried out strikes against Houthi military targets in Yemen.

Sector majors Woodside Energy and Santos gained 0.5% and 1.5%, respectively. Gold stocks advanced 0.6%. Heavyweight financials closed 0.1% lower.

Consumer stocks declined 1.2% in their biggest daily drop since Oct. 30. Woolworths and Coles Group lost 1.5% and 2.1%, respectively.

In New Zealand, the benchmark S&P/NZX 50 index rose 0.5% to 11,858.31. The benchmark gained 0.9% for the week.